Metallurgical results lift Marathon Gold’s shares

Test results from Marathon Gold’s (TSX: MOZ) Leprechaun and Marathon deposits at the company’s Valentine Lake gold camp in Newfoundland and Labrador show they are amenable to heap leaching.

Selected intervals of mineralized material were shipped to SGS Canada in late 2018, and highlights from the tests show a 72% gold-extraction average for a -25 mm crush size from the Leprechaun deposit after 160 days of leaching, and 65% for the same crush size from the Marathon deposit.

Final gold recoveries could be 2% lower after processing losses. The latest results are better than the 59% gold recovery used in a preliminary economic assessment from October 2018.

“Heap leaching of low-grade gold material is a potential enhancement for the project in recovering gold that may otherwise go on a stockpile or waste dump,” says Phillip Walford, Marathon’s president and CEO. “The PEA showed that traditional milling is expected to produce more than 85% of the gold for the project, with the balance from the heap leach. These very good heap-leach test results more than justify the consideration of heap leaching in our development plan, and have improved the project economics.”

Dylan Abbott (left), geologist, and Phillip Walford, Marathon Gold president and CEO, examine drill core at the Valentine Lake Gold Camp core building. Credit: Marathon Gold.

The Valentine Lake camp hosts four near-surface, mainly pit-shell constrained deposits, with measured and indicated resources of 2.69 million oz. (45.2 million tonnes grading 1.85 grams gold per tonne), and inferred resources of 1.53 million oz. (26.86 million tonnes grading 1.77 grams gold per tonne).

Most of the resources occur in the Marathon and Leprechaun deposits, both of which also have resources below the current pit shell, and are open at depth and on strike. Gold mineralization traces down almost a vertical kilometre at Marathon, and over 350 metres at Leprechaun.

The four deposits occur over a 20 km long system of gold-bearing veins, and much of the 240 sq. km property has had little exploration.

News of the test results on May 15 lifted Marathon’s shares 7.9% to  close at 95¢.

The shares have traded in a 52-week range of 65¢ to $1.05 and sold for $1.04 at press time. The company has a $167.5-million market capitalization.

Mick Carew of Haywood Securities raised his target price on the stock to $2 from $1.90, after the heap-leach tests were announced.

“We continue to like Marathon, given it is one of the few undeveloped, potentially open-pittable gold deposits in Canada, and a prime takeover target for a mid-tier or large-cap gold producer looking to add to their longer-term production pipeline,” Carew writes in a client note.

“With further support from the column-leach test results demonstrating the viability of lower-grade material at both the Marathon and Leprechaun deposits being amenable to heap leaching, we have updated our model accordingly. We have added a small heap-leach circuit [5,500 tonnes per day] that will process lower-grade [>0.5 gram per ton gold] material that would otherwise be treated as waste. The heap-leach circuit is expected to produce 21,000 oz. gold annually over the [11.75-year] life of the mine.”

Barry Allan of Laurentian Bank Securities has a $2.50-per-share target on the stock.

“The Valentine Lake gold project is a 4.2 million oz. resource that has the capacity to be a +200,000 oz. producer for more than 10 years, and is a major undeveloped open-pit resource that should attract a good level of corporate interest, once the prefeasibility study is completed.”